Toronto firms should look to Europe for export growth: Report

  • 22-Sep-2017
  • Toronto firms should look to Europe for export growth: Report

Toronto companies that want to grow their export business should think about looking to Europe in addition to Asia, according to a report released Wednesday by the international trade development arm of the Toronto Region Board of Trade.

“Europe presents the most opportunities for Toronto region businesses seeking to export,” according to the report from World Trade Centre Toronto.

The report focused on small and medium enterprises (SMEs), those with fewer than 500 employees.

“Considering the European Union’s Comprehensive Economic and Trade Agreement (CETA) is on the verge of implementation, Toronto-based businesses should be actively exploring business opportunities in Europe and working with international trade service providers . . . to build export plans.”

In fact, the report identified a lot of room to grow exports Canada-wide.

While only 4 per cent of SMEs in Canada export goods, an average of 25 per cent of SMEs in Germany, France, Japan and the United Kingdom do, according to data cited in the report.

And 77 per cent of Canadian export activity is with one international market – the United States.

“Most of Ontario-based exports are destined for the United States,” according to the report. “By way of comparison, any business that derives 75 per cent or more of its revenue from a single customer, puts itself at risk of going under. The need to diversify Ontario exports is great.”

The report goes on to say that while the Toronto region has the second highest concentration of industries in North America that make goods that can be exported, it is underperforming on the global stage.

The hope is that making international trade opportunities easier to identify may result in more businesses willing to develop plans for export to new countries.

“There are tremendous growth markets for our sectors – it’s a question of getting them comfortable with exporting and also getting them information they need to know about which markets to pursue,” said Jan De Silva, president and chief executive officer, Toronto Region Board of Trade.

According to the report, 76 per cent of Canada’s goods exports are generated by just 500 businesses.

If Canada increased its share of SMEs exporting to the same level as large firms, it would mean an extra 219,000 businesses would be in a position to generate an additional $255 billion in new export activity, De Silva pointed out.

The report is meant to help guide inbound and outbound missions for the Board’s World Trade Centre and the region’s municipalities.

“We’re going to be building a three-year calendar that is looking at 10 outbound missions per year,” De Silva said, adding that the trips will be made with mayors from different municipalities, not just Toronto.

The study came up with a list of the Toronto region’s top seven export sectors and the best global markets for them for them to sell products and services.

The sectors included aerospace, automotive, food and beverages, human health and sciences and three emerging sectors: fintech (financial technology), citytech (smart cities software, infrastructure) and cleantech (solar panel manufacturing, wind turbines, water conservation technology.)

For example, the study found that while France is currently the largest market for aerospace exports, Germany is Ontario’s fastest-growing marketplace and companies in the aerospace industry could increase sales by drafting an export development plan for Germany.

Asia offers the second largest number of opportunities and fastest-growing opportunities, according to the report, with the federal government actively pursuing deals with Asian countries and Asia being one of the most visited regions for trade missions.

According to the report, Canadian trade data needs to be updated and made less complex: for historical reasons, it’s possible to measure the movement of goods for traditional industries, but some new industries have not been classified and there is no way to track the flow of services internationally.

The system also needs to get better at tracking data at the city and metropolitan levels, according to the report’s authors.

Ron Koslowsky, Manitoba vice-president, Canadian Manufacturers and Exporters, questioned the figure in the report that pegged the percentage of SMEs exporting in Canada at 4 per cent.

That figure doesn’t seem to reflect the reality of commerce in Manitoba, which does not have the same highly and densely populated markets as Ontario, making Manitoba companies more likely to focus on exports.

“Over here, you don’t get enough butter on your bread if all you serve is the local market,” said Koslowsky.

“Essentially we’ve been forced to looking into the U.S. and other markets. I would say the majority of all our members would be exporting in one way or another.”

Source:-Thestar.com

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